Overview of Electrical Energy
Regulation Efforts in Brazil and their
Impacts: 1997-2008
Prof. Gilberto M Jannuzzi, PhD
University of Campinas
International Energy Initiative
1
Wire-Charge (Public Benefits)
Programs
• Regulated or state-owned utilities have historically
provided customers with certain ancillary services and
benefits such as EE, renewable energy, low-income
programs and R&D.
• With electric industry restructuring pressure to reduce
costs causes utilities to abandon such services.
• In many countries formal funding mechanisms (“public
benefits programs”) have been set up. A dedicated
revenue stream is typically raised through a small perkWh charge.
2
The allocation of the 1% fund (since 2004)
Board: Government,
Academia, Private
Sector
Regulator
Design and
Implementation
Public
Interest
EE
0,4%
National Public
Interest Fund
Public
Interest
R&D
0,2%
Generation
Transmission
>0,4% R&D
1%
sales
$$$
Distribution
Utilities
>0,2% R&D
>0,5% EE
Design and
Implementation
0,2% EPE 0,1%
2004
3/16
Wire Charge Program in Brazil –
History
• Traditionally, EE investments in Brazil were carried out
through subsectoral national energy conservation
programs: Electricity Sector: PROCEL. Results (19942000): 10.7 TWh, 640 MW peak (2000)*
• Fuel efficiency: coordinated by Petrobras (?)
– Of most interest is a cogeneration program.
– > 200 projects in portfolio, none of which could be
financed
2
• *Compare effect of rationing in 2001 :Total savings =
26 TWh (4 Regions) (for a total national consumption
of 284 TWh), 13,000 MW peak (Source: Maurer 2003)
4
Diapositiva 4
2
CONPET was the name of the program. PETROBRAS was in charge of its executive secretariat, and was in fact its main funder and
implementing agent
, 10-12-2004
Wire-Charge in Brazil -- History
•
•
•
•
•
Since 1994, concession contracts for newly privatized state power
utilities contained clauses to oblige utilities to invest in EE and R&D
(very generic and hard to monitor; utilities were using this money
basically to reduce their commercial losses – which they would be
doing anyway)
1998: ANEEL (regulatory agency) resolution defines amount of annual
investment (1% of annual utility net revenues), procedures for
submission, approval and verification of utilities’ EE and R&D
programs.
2000: Energy bill with explicit provisions for a public benefit fund
CTEnerg. Part of the 1% annual utilities’ net revenues is allocated to
CTEnerg and part remains with utilities for EE (only end use) and R&D.
1% obligation extended to Transcos and Gencos and state-owned
utilities.
After 12/2005 share of funds allocated to EE will go down from 50%
to 25%.
Late 2004: Proposal for Wire-Charge Reform
4
3
5
5
Diapositiva 5
3
but only fund energy R&D and not EE
, 10-12-2004
4
and only Distribution co. are obliged to invest in EE programmes
, 10-12-2004
5
in March/2004 a major reform re-allocated the distribution of the 1% charge: 0.2% went to the Ministry of Energy, 0.4 to Ctenerg and 0.4
remained within the utiities (supervised by ANEEL).
In Nov/04 ANEEL started a discussion to reformulate the appliaction of the EE part of the 0.4% mandatory investments in EE and R&D by
utilities.
, 10-12-2004
Wire-Charge in Brazil -- History
CTEnerg:
• managed by a board with public/private membership
• Support public interest energy R&D and EE, its investment
strategies are to complement those of the utilities
• Activities make contributions to following areas: supply
increasing demand for energy services, diversification of
electricity generation matrix, development of EE technologies
with low environmental impact, investment to favor areas
where market agents have less interest
6
Linha do tempo
2/12/1999
Resolução
ANEEL 334
18/4/2001
Resolução
ANEEL 153
17/9/2001
Resolução
ANEEL 394
17/9/2001
MPEE
2001-02
Permite, em
adição às
demais
tipologias, a
execução de
projetos de
melhoria de
fator de
carga.
Obriga, para
o ciclo
2000-01,
que todos os
projetos
sejam de
substituição
de lâmpadas
em
residências
de baixa
renda ou de
iluminação
pública.
Permitidas
as tipologias
Diagnóstico
Energético,
Educação,
Gestão
Energética
Municipal,
Comercial/S
erviços,
Iluminação
Pública,
Industrial,
Poderes
Públicos,
Residencial,
Rural e
Serviços
Públicos.
Para as 3
primeiras,
não há
limite de
RCB.
Em
conformidade
com a
resolução 394
7/10/2002
MPEE
2002-03
Permitidas as
tipologias
Comercial/Serviços,
Educação, Gestão
Energética
Municipal,
Iluminação Pública,
Industrial, Poderes
Públicos, Serviços
Públicos,
Residencial,
Aquecimento Solar
para substituição do
Chuveiro Elétrico e
Rural.
1/12/2005
MPEE
2005-06
Permitidas as
tipologias
Comercial/Serviços,
Baixa Renda,
Industrial, Poderes
Públicos, Serviços
Públicos,
Residencial,
Aquecimento solar
para substituição de
chuveiro elétrico e
Rural. Não há limite
de RCB para a
tipologia Baixa
Renda.
The administration of Funds to EE and
R&D
• During 1998-2000: Utilities under Regulator supervision
• Since 2000: part of the funds managed by utilities (under
Regulators oversight) and part by a Board of appointed members
from government, academia and private sector
• The regulator periodically sets rules for investment allocation and
oversees the implementation and expenditures
• CTEnerg´s Board: 9 members
Ministry of Science and Technology (3)
Ministry of Mines and Energy (1)
The regulator (1)
Academia (2)
Private sector (2)
• PBF’s administration: a mixture of utility administration with the
regulator’s oversight and a non-governmental decision maker
8/16
RESULTS
9
Results
Analysis of 98-99 programs:
• High cost of conserved electricity (now economic criteria for exante evaluation, ex-post evaluation plan)
• Program performance hard to verify (amount of saved energy)
• No strategy for market transformation
• Duplication of programs over years and amongst
concessionaires
• High proportion of expenditures on marketing (disallowed since
2000), high proportion of expenditures on small and
uncoordinated projects (now multi-year projects which are
larger and more cost-effective); most utility end-use programs
for public lighting (40-50%)
• Fixed expenditure shares for programs in end-use sectors can
lead to less cost-effective programs and miss local opportunities
10
Utility programs
Ciclo
#
Companies
Investments
(millions R$)
1998/1999
17
196
Avoided
Demand
(MW)
250
1999/2000
42
230
370
1.020
2000/2001
64
152
251
894
2001/2002
64
142
85
348
2002/2003
2003/2004
64
64
154
313
54
110
222
489
2004/2005
64
175
275
925
2005/2006
63
311
158
569
2006/2007
61
261
138
369
Total
-
1.934
1.691
5.591
Saved Energy
(GWh/year)
755
Cost- benefit ratio by type of programs
Tipo de Projeto
Investimento
Apropriado (R$)
Energia
Economizada
(GWh/ano)
Demanda
Evitada
(MW)
RCB
Iluminação Pública
374.608.281 (40%)
797
175
0,48
Residencial
133.474.859 (14%)
930
313
0,32
Industrial
95.992.780 (10%)
376
59
0,32
Serviços Públicos
91.277.906 (10%)
312
118
0,45
Educação
80.878.694 (8,6%)
90
25
0,11
Comércio e Serviços
59.489.341 (6,3%)
130
30
0,21
Poder Público
34.788.865 (3,7%)
57
14
0,67
Aquecimento Solar
19.406.493 (2,1%)
n.d.
n.d.
n.d.
Rural
14.568.725 (1,6%)
83
9
0,25
Perdas
12.408.139 (1,3%)
79
17
0,12
Gestão E. Municipal
11.470.338 (1,2%)
n.d.
n.d.
n.d.
Fator de Carga
11.271.382 (1,2%)
0,6
6
0,09
Total
939.635.803
2.853
765
0,37
ANEEL: Changes in 2007
• Creation of a special department in charge of
utility program (EE and R&D) – 10 years
late!!!
• Revision of rules, with emphasis on RESULTS
– EE M&V
– More flexibility to utility
– Multi-year programs
– Multi-utility programs
Ex-ante & ex-post C/B ratios
45
40
35
30
25
20
15
10
5
0
RCB<0,4
0,4<=RCB<0,5
0,5<=RCB<0,6
0,6<=RCB<0,7
previsto
0,7<=RCB<0,8
realizado
0,8<=RCB<0,9
0,9<=RCB<1
RCB>=1
Valores médios previstos de RCB por uso final
e por concessionária
1,2
1
0,8
0,6
0,4
0,2
0
iluminação
força motriz
condicionamento de ar e
refrigeração
Eletropaulo
Cemig
aquecimento solar
Bandeirante
Copel
IP
aquecimento
Valores médios realizados de RCB por uso
final e por concessionária
1,2
1
0,8
0,6
0,4
0,2
0
iluminação
força motriz
condicionamento de ar e
refrigeração
Eletropaulo
Cemig
aquecimento solar
Bandeirante
Copel
IP
aquecimento
Breakdown of utilities’ investments in EE (%) 1998-2003
100%
90%
80%
Commerce and
Services
70%
Industries
60%
Hospitals
50%
40%
Residential sector
30%
Public Lighting
20%
10%
0%
1998/1999 1999/2000 2000/2001 2001/2002 2002/2003
17/16
Major characteristics of utilities’
programs during 1998-2004
• Dominance of Lighting Programs, in particular
Public Lighting
• Utilities concentrate investments in programs
that are easier to manage, not the most cost
effective ones
• No significant pooling of resources, no efforts
to leverage investments with market players
• Poor reporting. Poor monitoring and
evaluation by the regulator
Current practice (up to 2007)
• Too much emphasis on bureaucratic
procedures and formal rituals
• Annual programs submitted and required
approval by the regulator (ex-ante evaluation)
• Poor ex-post evaluation (mainly expenditure
check not energy savings!)
New regulation 1/2
• Annual programs continuous submission of
programs
• More autonomy to utilities to propose innovative
projects
• Less emphasis on ex-ante analysis and more ex-post
evaluation by the Regulator
• Definition of pre-approved projects
• Definition of Major Projects by the government
(regulator) where utilities can collaborate
New regulation 2/2
• Allocation of funds to MEV
• Independent evaluation
• List of programs with design&methodology
pre-approved
• All projects will be evaluated: marketing,
education, training, engineering, etc by
suitable metrics.
Lessons regarding Energy Efficiency
• Wire charge mechanism have raised the investment
levels in EE
• Leveraging effect of these resources have been small
• Some utilities have improved program design, many
others have not
• No significant effort in MEV
• Experience with performance contracting and
improved cost-benefit ratio
• Started significant ESCO development
• Political attacks have increased and unless results
can be demonstrated there is a danger of losing
funding for EE and R&D
22/16
ISSUES
• Utilities’ disincentives: program reduces sales, but some
utilities detected business opportunities and founded
(unregulated) ESCOs
• Lack of comprehensive studies for EE potential limits
potential system-wide benefits of EE investments
• ANEEL is not equipped to monitor program
• Manual for preparation of projects is still cumbersome
and may prevent design of good ESCO projects
• Economic benefits of investments done under the
program are supposed to be returned to consumers in the
form of lower tariffs. – Is this the best use?
23
Lessons (1/2)
• Utilities
– Energy Efficiency
•
•
•
•
•
PBF have raised the investment levels in EE
Leveraging effect of these resources have been small
Some utilities have improved program design, many others have not
No significant effort in MEV
Experience with performance contracting and improved cost-benefit
ratio
• Started significant ESCO development
– R&D
•
•
•
•
Important learning process
Some utilities starting to think more strategically
Capacity building around the country
Evaluation: inexistent
2006 ACEEE Summer Study on Energy
Efficiency in Buildings
24/16
Final considerations
• PBF were important to secure and increase the funding
levels after reforms
• Areas of attention:
– The administration and governance
• The split administration of resources between utilities and CTEnerg is
still evolving but needs to prove results
• Utilities are responsible for the main investments in EE, there must be
a revision in the regulation in order to give positive incentives for
better programs
• There is a great lack of coordination amongst the main actors
(regulator, CTEnerg, utilities). Very fragmented efforts.
– The need to improve collaboration and pooling of more
resources into EE and R&D
– Monitoring and independent ex-post evaluation
– Political attacks have increased and unless results can be
demonstrated there is a danger of losing funding for EE and
R&D
2006 ACEEE Summer Study on Energy
Efficiency in Buildings
25/16